Success story: Christy Tennant
Christy Tennant was 19 when she got her first credit card.
Her first shopping spree left her with a $500 balance that just kept growing.
"Over the next 12 years, I accrued thousands in debt, never paying the balance off," notes Christy, now 33 and a public relations director from Staten Island, N.Y.
By age 30, she owed about $8,000 on credit cards. And she'd had enough.
"One time I actually figured out how much money I had spent over the years just in interest, and I just felt sick about it," she says.
But Christy's income was too erratic to get out of debt. At one point, she'd even lived off her credit cards for a few months while auditioning for parts as an actress.
She needed a real, full-time job. So Christy figured out how much money she would need to pay off her debt in one year, and then went to an employment agency.
The agency soon placed her as an executive assistant at a cosmetic company earning close to the amount she had sought.
Then Christy transferred her credit card balance to a new card with a 0% interest rate.
"When the card came, I cut it up immediately," she says. "So I never added to the balance there, and each month I paid as much as I could."
She typically made payments of $300 to $400, and because she was paying no interest, every cent of that went to reducing the balance.
She also lived within her means, actually "well beneath my means," she recalls.
Christy says that was easy once she dedicated herself to becoming debt-free. Even with a higher income, she stayed in her small apartment and drove her older car into the ground.
"The thing was always to go out for dinner, but I started just inviting people over to my place, and I would spend less in just ingredients to feed four or five people than I would have if I had gone out for dinner."
She also found ways to reward or pamper herself that didn't involve spending a lot of money, such as biweekly manicures (at $18 a pop) and a nice bottle of wine every now and then.
"What I find is that people will deny themselves small things, and then they will feel like because they denied themselves small things that they probably could afford actually, they will splurge on big things using their credit card," she says. "It's almost like when you're dieting and you don't give yourself any little treats, and then on Friday night you eat an entire chocolate cake."
Christy recalls times of eating sparingly to avoid spending money and then treating herself to a $75 dinner -- which she charged on her credit card -- because she "deserved" a nice meal. The same logic often applied to clothing purchases, too.
At age 32, just a year and a half after embarking on her debt-elimination plan, Christy succeeded in becoming debt-free.
The final payment was made with her income tax refund. She even had an extra thousand dollars leftover that completely belonged to her.
"I had never, ever known that feeling," Christy says.
She cried, called her mom and then celebrated with a manicure and pedicure -- again, something small that wouldn't throw her back into her old habits.
Now debt-free for more than a year, Christy continues to live simply. She checks DVDs out of the public library instead of buying or renting them, shops at consignment stores and doesn't use her credit card unless she can pay off the balance in full when the bill comes.
That credit card gives her rewards, and she always chooses the cash-back option.
Christy also is now able to donate a substantial amount of money to charity, giving 16% of her gross income last year.
She did finally replace her car, after it died.
And she took a vacation to England, which she paid for -- in cash.
Christy's tips for eliminating credit card debt once and for all:
- Stop charging. You can't get out of debt if you're still spending money you don't have. If you can't buy an item with cash or your debit card, don't buy it.
- Give yourself little treats along the way so you don't give yourself a big treat that will sink you further into debt. "You don't have to live like you're in poverty just because you're watching your income."
- Forgive yourself. There comes a moment when you have to recognize that you've made some unfortunate financial errors. Let it go.
- Don't be a victim. Take responsibility for your actions because you accumulated the debt. "Now you've got to get out of it."
- Keep chipping away. There will be months when your debt doesn't seem to be going anywhere. "You have to barrel down and know that it could take a while, but you're going to do it."